Old Beliefs Die Hard

It is very difficult coming to the realization that something or someone you truly believe in, have revered, and defended for a long time, and have dedicated your life to following is not what you thought it was and might even be the exact opposite of what you appreciated about it.

For me recently, I have had to come to grips with the fact that former Penn State head football coach Joe Paterno was not the hero I revered for a long time. See, I grew up in Pennsylvania and followed his winning teams every year. His success was abundant while all along running a squeaky clean program with no recruiting violations and a good graduation rate. To top it off, we shared an ethnic heritage (Italian) which became a source of personal pride.

Then the Jerry Sandusky child abuse scandal hit. My world was shattered. How could Coach Paterno only inform his superiors at the University when he was told that his former assistant coach Jerry Sandusky was caught showering with a young boy in a university locker room? How could he not blow the whistle loudly to put an end to the carnage and bring a deviant to justice? I mean, Paterno was the moral bastion of college football. As an educator, he would never forsake the well-being of youngsters in order to protect a friend and/or his football program.

But, it’s true. Paterno did not do all that he should have, and many more young boys were abused at Penn State facilities by Jerry Sandusky as a result. This realization has negated close to 40 years of hero worship. Joe Paterno made more than a mistake; he allowed a tragedy to continue. He was not the moral bastion I naively thought he was. It was tough and a long process, but he is no longer a hero.

Thus, I can now empathize with folks who need to come to grips with their wrongheaded thinking that government is the great solver of our problems. Take the so-called “War on Poverty” programs launched under Lyndon Johnson in the 1960s. Supporters would argue that it was the right thing to do at the right time to eradicate poverty. However, close to 50 years and $15 trillion later, the poverty rate has barely budged, going from about 15 percent to 13 percent. In fact, poverty was on a steep decline for five years preceding Johnson’s programs. His “War on Poverty” halted that decline and stabilized the poverty rate in the low teens. But if you listen to advocates of the federal social safety net, you’ll hear how without federal largess the problem of poverty would be more acute. They just can’t bring themselves to accept the realization that federal welfare programs are wasteful, debilitating, and ineffective.

Of course, the best example from recent history where government policy has been wasteful, debilitating, and ineffective is the economic policies of the current administration. The same folks that can’t admit to themselves that the War on Poverty was a failure are now defending the Obama Administration’s policies as if they have been successful in bringing about recovery from the Financial Crisis of 2008. After trillions have been spent and interest rates kept at rock bottom lows for the last four plus years, the unemployment rate has never fallen below eight percent. In fact, the real unemployment rate (U6 which includes discouraged workers) is 15 percent and on the rise. Most embarrassing for the President is the fact that more people went on Social Security Disability than got jobs in June.

To be sure, there are many more examples of government intrusion gone wrong. The greatest of which is Roosevelt’s New Deal because it prolonged the Great Depression through the 1930s.

So, with such a track record of failure, why is it that advocates of big government cannot bring themselves to realize that their philosophy is bankrupt and wrongheaded? One reason is emotional. They think with their hearts and not their heads. They are so fixated on helping others and believe they may need the same kind of help someday, that they forsake logic and experience for empathy and generosity (of other peoples’ money of course).

Another reason is socialization. There are so many Americans who rely on the federal government for one reason or another that it is hard to find many that are willing to bite the hand that feeds them. Take college professors and the mainstream media (MSM) for instance. Very, very few are willing to go against the Establishment line for fear of losing grant money, being denied tenure, or losing the interview or even their jobs (remember Helen Thomas?). These are the societal elites that most Americans get their information from (many times academics appear on the MSM). It’s no wonder many Americans lack basic economic knowledge. They have been bombarded through the years with the party line instead of the truth.

At the end of the day, it’s brutal being challenged let alone acknowledging that what you have believed in for a long time is poppycock. I know – I lost a long-time hero recently. It is a tough and long process but one that needs to be undertaken by those that cherish big government intrusion in our economy. It needs to be undertaken so the widespread suffering resulting from big government intrusion in our economy ceases.

You forgot a segment of those who found they had to turn their backs on long-held beliefs – the ones like me who saw through the big lies that conservative cognoscenti consistently feed the American public. AFAIK, I’m the only BC regular who has made such a radical departure from the beliefs of young adulthood.

You’re recycling the old argument that FDR prolonged the Depression, when in less than three years he nearly had the GDP back up to where it was before the crash. You’re ignoring the fact that the Conservative Coalition essentially forced him to adopt austerity measures…and down we went back into the second dip of the Depression. And you have never come to realize that if taxpayer-funded stimulus was as bad as you continually claim, then the biggest taxpayer-funded stimulus in American history – World War II – should have driven us deeper into depression instead of getting us out of it!

You rail against the Obama administration, yet you pointedly ignore the unprecedented efforts of the minority party to stop everything, absolutely everything he’s tried to do to help America. For instance, the Republicans just successfully filibustered a bill to take away tax breaks for companies that offshore our jobs, and give tax breaks to companies that bring jobs back from overseas to America. Why was it filibustered? Because, according to Senate Minority Leader Mitch McConnell, the Democrats in the Senate would not allow a rider on the bill to defund Obamacare!

If fiscally-conservative government is the way to prosperity for a nation, then America’s economy should be booming! Why? Because – in great part due to Republican opposition to all his bills – Obama’s administration is the most fiscally-conservative administration since Eisenhower!

Kenn, instead of just pointing a finger at Obama, do something different and look at what he tried to do and why he was not able to do it…or have you forgotten how America’s credit rating was downgraded because John Boehner couldn’t sell the debt ceiling-raise to the Tea Party Caucus? He was bragging that he got 98% of everything he asked for in his negotiations…but 98% wasn’t good enough for the Tea Partiers, and our whole economy is still paying the price for the subsequent credit downgrade.

Dig, Kenn, dig! Challenge your own assumptions, answer the hard questions, and check your emotions at the door. Look at each of your beliefs, and then look for examples to prove that they work, and just as importantly, look for examples to show that the other guys’ beliefs work, too! Once that harsh light of history shines on your beliefs, all of a sudden uncomfortable little facts start nipping at your heels…as is shown by your continuing refusal to dig a bit deeper on why we had a double-dip Depression…and why we got out of it and stayed out of it.

Again, so far as we know, only one BC regular has turned his back on the political indoctrination of his young adulthood…and that’s me. Why? Because I saw that what I’d been taught was, as you say, “poppycock”. When you show enough gumption to make the same leap of understanding in the face of everything you’ve been taught, then come preach to me, but not before.

Glenn Contrarian

errata –

I think there is one other BC regular who radically changed his political beliefs – Roger. He went in a direction I don’t agree with, but he showed the same gumption. That’s the main reason why I sorta like and respect him – he climbed a philosophical mountain that I don’t like, but he still made the summit. Any alpine climber can appreciate the metaphor.

Kenn Jacobine

Glenn,

I supported Ted Kennedy for president in 1980. That is how far I’ve come politically. So you are not the most righteous because you transformed your thinking. Other people that end up disagreeing with you can also transform.

As to your diatribe above, it always seems to be the Republicans fault that Keynesians are not allowed to go far enough to help the country. The fact is the Hoover/FDR Great Depression was the first where the government attempted to remedy the situation with intervention – stimulus, make work projects, price-fixing, etc… It all failed just like it has during our current crisis. GDP is a bad measurement of the health of an economy because it includes government spending. Of course the economy seemed to get better in 1935-36 just like it appeared it was getting better last year. Two points – the more government spending the more GDP looks good. And government spending simply re-inflates new bubbles in the economy. The Great Depression did not really end until government cut expenditures in 1946 – then it took off. I’ll say this, during the war Americans were accumulating savings because they couldn’t buy consumer goods. That savings fueled the recovery starting in 1946. This is anti-thetical to Keynesianism which is anti-saving and consumer spending oriented. I have said all along that when government gets out of the way and workers can save the economy will finally rebound. The problem now is that the Fed has printed so much money and we are in so much more debt that when interest rates do climb the interest on the debt will force more printing and then 10 percent inflation right now will look real good. Mark my words, you cannot build a healthy economy on debt.

Baronius

Actual Keynesianism would never try to build an economy on debt.

Deficit spending is like cocaine – you do it to get a little bump when you’re run down, you do it to keep going when you’re riding high, and pretty soon you’re doing it because if you stop your body will shut down. Keynesianism assumes that you can do a little debt during a recession and pay it off during a growth period. There haven’t been many cases of governments actually doing that though.

Igor

Kenn and Baronius are both ignorant of what Keynes principles are. That’s easy to understand if they tried to read Keynes in the original because it is really thick and obtuse. Keynes was not very mathematical so he described things in words, not equations. It’s rather like trying to read Newton on gravity: words, words, words, intertwining and complex. These days we express Newtons principles with math, differential equations, etc., Hamiltonians, etc., and even 1st year physics students can easily understand gravity and actually solve problems and predict behaviour.

Even a complex Newtonian situation like an automobile suspension is readily attacked with modern math, like calculus.

The same is true of economics, where all modern economists use calculus.

Briefly, Keynes was re-acting to economists discovery (200 years ago) that capitalism was the only economic system whose boom/bust cycles were not triggered by external phenomena, such as war, plague, drought, etc., but were triggered and moderated by systemic conditions internal to the econ system itself.

It’s a problem of dynamics, of change, and coupling between elements. Rather like an automobile suspension, actually.

So the same rules apply. In Mechanics (as in electronics) instability is the result of excess positive feedback, i.e., concomitant effects that re-enforce any applied force. So in economics one looks for ‘positive feedback’ problems and then formulate ways to reduce positive feedback or to introduce negative feedback.

Thus, in brief, Keynes specifies ‘counter-cyclical’ policies, i.e., when the system is booming take money out; when the system is recessed put money in.

Keynes never recommends ALWAYS putting money in. For example, in 2000 Keynes would have recommended increasing savings and paying off debts because the economy was booming. What we actually did was the opposite since we spent crazily and re-enforced the spending. And thus we bear the bitter fruit of a pro-cyclical policy. We should have learned from that to go back to counter-cyclical policy when the economy tanked.

Remember: Keynes policy is counter-cyclical.

It’s very simple. Ask any good businessman.

Glenn Contrarian

Kenn –

You said:

As to your diatribe above, it always seems to be the Republicans fault that Keynesians are not allowed to go far enough to help the country.

1. Kennedy was quite conservative compared to today’s Democrats. He not only cut taxes but continued to increase spending. And then there was the Bay of Pigs, the Gulf of Tonkin incident, et cetera. Saying that you changed greatly by going from voting from JFK to your current philosophy is not entirely accurate.

You said:

As to your diatribe above, it always seems to be the Republicans fault that Keynesians are not allowed to go far enough to help the country.

2. No, I didn’t say that. If you’ll go back and check, much of the strength of the Conservative Coalition came from the Southern Democrats. It is much more accurate to say that it always seems to be the conservatives’ fault that Keynesians are not allowed to go far enough to help the country.

You said:

The fact is the Hoover/FDR Great Depression was the first where the government attempted to remedy the situation with intervention – stimulus, make work projects, price-fixing, etc… It all failed just like it has during our current crisis. GDP is a bad measurement of the health of an economy because it includes government spending. Of course the economy seemed to get better in 1935-36 just like it appeared it was getting better last year. Two points – the more government spending the more GDP looks good. And government spending simply re-inflates new bubbles in the economy. The Great Depression did not really end until government cut expenditures in 1946 – then it took off. I’ll say this, during the war Americans were accumulating savings because they couldn’t buy consumer goods. That savings fueled the recovery starting in 1946.

3. The Feb-Oct 1945 recession included a drop in GDP that was over twice as great as the GDP reduction of the Great Recession. This was probably expected since the Allies could see that the war was winding down on all theaters and stopped buying so much war materiel. In the following years it is true that government spending (adjusted for inflation) dropped by two-thirds by 1948, but what you’re forgetting is that in the preceding seven years we’d made enormous investments in industrial infrastructure, and we had a whole devastated world that sorely needed what America produced.

It is not argued by anyone of note that WWII didn’t pull us out of the Depression…but it is as I’ve told you many times: in economic terms, WWII was America’s greatest economic stimulus in history. We made vast taxpayer-funded investments in everything involving industry or infrastructure…and that not only pulled us out of the Depression, but it laid the foundation for our economy for decades to come.

In WWII, the American government put the people to work, and do you really think the taxpayer-funded improvements we made in industry and infrastructure somehow went *poof* and disappeared when the war wound down? Do you really? READ what Igor’s trying to tell you, Kenn – Keynesian economics are counter-cyclical. In bad times, the government should kick-start the economy to get it going (which is precisely what we did in WWII), and in good times, the government should raise taxes to pay down debt (which is precisely what Truman did in the early 1950’s and what Clinton did).

Conservative (Austrian) economics, on the other hand, pretends that government has little or no role to play in the economic health of a nation. Did you not learn anything from living in third-world nations where the governments were weak and relatively ineffective and unable to control corporate corruption, whereas ALL first-world nations have strong and (to varying degrees) socialized economies?

Baronius

Igor, that’s what I said.

Igor

@7-baronius: your #4 is just wrong in all respects, if that’s what you’re referring to.

Baronius

Igor – I said, “Actual Keynesianism would never try to build an economy on debt….Keynesianism assumes that you can do a little debt during a recession and pay it off during a growth period.”

You said, “Keynes specifies ‘counter-cyclical’ policies, i.e., when the system is booming take money out; when the system is recessed put money in. Keynes never recommends ALWAYS putting money in.”

Not only did we say the same thing, we used similar phrasing. Yet you say that I’m “just wrong in all respects”. Explain.

Baronius

Igor – Responding to my last comment would be a great opportunity to avoid looking like a crank. My comment #4 correctly characterized Keynesian thought, as well as critiquing the actual results of it. I realize that you may not agree with the critique, but it’s wrong of you to insult my characterization of it, especially when you follow up with a similar characterization. You also lumped me in with Kenn on the issue, even though the first line of my #4 was a rebuttal to the last line of his #3.

Igor

@4-Baronius:

Keysianism is based on cycles, not debt, because instability leads to explosion. Debt is just a tool, it’s just a fact, what’s important is the dynamic, the instability.

Keynesianism assumes that you can do a little debt during a recession and pay it off during a growth period. There haven’t been many cases of governments actually doing that though.

During WW2 we incurred great debt to develop war material, and then paid them off afterwards. During WW2 FDR constricted business profit with “cost plus $1″ contracts, and hired business execs for $1/year salaries. The payoff for business was that their plants increased in size and productivity and revenue. We started to learn that it isn’t profit but revenue that makes a business prosperous.

The USA, it’s citizens and government, built a tremendous production machine and then turned it over to business, for a song.

Then the GI bill sent soldiers to school where they learned to do the jobs needed to support their young families.

It was government money that built our modern economy. Plus the enthusiasm and support of the American people.

Kenn Jacobine

Glenn,

I wrote “Ted Kennedy” not JFK. How old do you think I am?

Glenn Contrarian

Crap. GOT to start reading more closely (except for when it’s anything by Clavos, because I wouldn’t want him to think that anyone from red states like MS has a high reading comprehension).

My bad, Kenn – thanks for pointing it out.

http://www.squidoo.com/lensmasters/IanMayfield Dr Dreadful

Again, so far as we know, only one BC regular has turned his back on the political indoctrination of his young adulthood…and that’s me.

While not as Damascene a conversion as yours, Glenn, I too held strongly right-of-centre opinions in my youth, when my primary political influences were my parents, both members of the local Conservative Party. When I attained majority, one of my first significant acts was to enter a voting booth to re-elect Margaret Thatcher.

My outlook has drifted leftwards since then, though, as I went out into the wider world and came into contact with those who had a different view. In particular, I’ve spent a large portion of my life working with those on the poverty line and beneath, and came to realize how naive the conservative/libertarian ideology of “I did it, Sir Bill Moneybags did it, therefore so can you” was in the face of actual people whose set of circumstances and life skills equipped them not at all to emulate you or Sir Bill. Conservatism, to me, seems to attract those who lack empathy; those with an inability to say to themselves, “OK, I did it – but what if, in that same situation, I wasn’t me, but you?”

I’ve retained from my younger days a mistrust of the far left and of socialism, at which point on the spectrum ideology seems equally divorced from the reality of the human condition, but that doesn’t mean there aren’t one or two good ideas over there in the red zone. I guess you could say I’ve settled slightly left of centre. My social politics are very liberal. My fiscal ones, less so: I’d prefer a smaller government – not necessarily in terms of activity, since I see in my everyday working life the good done by many of its programs, but the bureaucratic, taxation and statutory sides of things could certainly benefit from a massive efficiency drive.

I’m actually coming to the realization that in the current economic climate, and in particular with the major impacts coming down the pipe as a result of ecological crises, nobody‘s idea of what to do about things inspires much confidence. I think the best way to manage the 21st century economy has yet to be invented, and may never be.

Glenn Contrarian

Doc –

With only a few exceptions, the significant majority of those who made such changes to their political outlook have been from the right to the left, particularly with the growing acceptance of LGBT’s and the increasingly lily-white nature of the Republican party.

http://www.squidoo.com/lensmasters/IanMayfield Dr Dreadful

I dunno, Glenn. One often hears it said that people tend to become more conservative as they get older – there’s that famous maxim, often attributed to Churchill, that a young man who isn’t a liberal has no heart and an old man who isn’t a conservative has no brain – but has anyone actually done studies or surveys to find out if that’s true?

Since people’s politics are usually motivated by self-interest, I would imagine that your economic status and where you live are a more significant indicator than age of how you tend to vote.

Glenn Contrarian

I’ve heard the same thing a lot of times, Doc, and it is quite true that the more rural one’s setting, the more likely one is to be conservative. But Churchill’s quote wouldn’t be the first example of a conservative tenet that was based more on swamp gas and moonshine than on fact.

Clav

Glenn’s entire outlook on all of life is one cliché after another…

Glenn Contrarian

And Clav loves to make broad-brush assumptions of those who disagree with him.

But I’d still buy him a beer – a good bottle of Stone IPA’s “Arrogant Bastard Ale” that has as a motto “You’re not worthy”. But my choice wouldn’t be because of the name (though it would be for certain other BC residents (but I won’t mention Chris’ name, honestly, I wont!)), but simply because it’s a good, hop-heavy ale.